Pakistan stocks slide as geopolitical tensions overshadow rate cut optimism

Pakistan's benchmark stock index closed lower on Tuesday after a volatile trading session, as persistent selling pressure erased early gains fueled by a central bank rate cut.

The KSE-100 index opened on a strong note, buoyed by the State Bank of Pakistan’s decision to cut the policy rate by 100 basis points, analysts said. Investors initially welcomed the move, sending the index surging to an intraday high of 990 points.

“However, the celebrations were short-lived,” said an analyst at Topline Securities.

Profit-taking emerged across key sectors as the session progressed, gradually eroding the morning gains. The index ultimately closed down 0.47%, as renewed geopolitical tensions between Pakistan and India unsettled investors.

“The reversal in market trajectory was primarily driven by concerns over escalating tensions between Pakistan and India, which overshadowed the central bank’s dovish stance,” the analyst said.

An analyst at Ismail Iqbal Securities noted that investors were largely cautious ahead of the upcoming national budget, with most known factors seemingly priced into the market.

Meanwhile, an analyst at Al Habib Capital described the session as "highly volatile," with the market initially absorbing the impact of the rate cut before succumbing to a strong wave of selling.

An analyst at Pearl Securities said profit taking ensued during the latter half of the session resulting in the market closing on a negative note.

A recent Moody’s assessment indicated that geopolitical tensions were disproportionately affecting Pakistan’s economic outlook compared to India’s, with higher military spending adding to concerns over economic stability.

KSE-100 index shed 0.47% or 533.73 points to close at 113,568.51 points.

Currency

US dollar gained against PKR in the inter-bank market. Pakistani currency lost 15 paisas to close at 281.37. In the open market USD was trading at PKR 283.15.

Indian Stocks

On Tuesday, the Indian stock market ended with losses as tensions between Pakistan and India increased. Investors were also worried because global markets were weak ahead of the US Federal Reserve's decision on interest rates.

However, experts say that while falling crude oil prices are causing problems for commodity traders, they could actually help India's struggling economy and give a boost to the stock market.

BSE-100 index shed 0.71% or 182.19 points to close at 25,386.17 points.

DFM General Index gained 0.16% or 8.29 points to close at 5,352.97 points.

Crude Oil

Oil prices went up on Tuesday after falling the day before due to OPEC+'s decision to increase production. The rise was mainly driven by technical factors and buyers looking for good deals, but worries about too much supply in the market remain.

Experts say this price increase is more about market trends than actual demand. Several challenges—such as OPEC+'s new production strategy, uncertainty over demand due to U.S. trade policies, and lower price forecasts—are still affecting overall price movements.

Brent crude prices decreased by 2.22% to $61.57 per barrel.

Gold Prices

Gold prices hit a two-week high on Tuesday as investors sought safety amid US President Donald Trump’s tariff threats and uncertainty over the Federal Reserve’s policy meeting.

His recent announcements, including a 100% tax on foreign-made movies and upcoming pharmaceutical tariffs, have fueled market volatility, pushing investors toward gold as a secure option.

International gold prices increased 2.03% to close at $3,381.91 per ounce. In the local market, gold prices increased PKR 6,100 to 356,100 per tola.